On 1st and 2nd November 2016, MVNO Europe secretariat and members participated to the MVNO Networking Congress in London. MVNO Europe debated with industry stakeholders key points concerning the MVNO sector: the end of retail roaming surcharges, the transition to 4G and 5G, and the business perspectives in IoT services brought by the new eSIM standard.

In a panel on roaming, Morgane Taylor, Policy Officer at MVNO Europe indicated that if the end of retail roaming fees could open opportunities for MVNOs with expected surges in traffic volumes, a lot of uncertainty remained on the wholesale roaming markets. The impact of ‘roam-like-a-home’ on MVNOs is unclear and will depend on the on-going negotiations at European level. The European Commission proposal on the table to review the EU regulated wholesale roaming caps will lead to serious disruption of competition and force MVNOs to withdraw their most generous data-led offers. Much work still needs to be done in the months to come to ensure that all operators, including innovative players such as MVNOs, can continue to compete on the markets.

Our member Franz Delpont from Euro Information Telecom debated, in a panel with MVNOs Talk Talk and Virgin Mobile Polska, on the future of communications services in light of the 4G transition as well as future developments on 5G. It is crucial for MVNOs to participate in the take-up of the latest standard and be able to provide cutting-edge technology to their customers. MVNOs are too often barred from offering higher value-added services and standards.

MVNO Europe Chair Jacques Bonifay (Transatel) gave exciting perspectives for MVNOs on the IoT segment, as the eSIM standard is being integrated. Nevertheless, MVNOs need to remain vigilant at business and policy levels as to make sure the value proposition will not shift to device manufacturers in the future.

The “Roaming Coalition”, bringing together European competitive operators representing more than 70 million SIM cards, calls for sustainable conditions on the wholesale roaming market to enable fair competition as retail mobile roaming surcharges are scrapped.

The caps agreed today amongst Member States go against the underlying economics of operators at wholesale level, with a cap for data at 10€/GB on the wholesale market, while common existing retail offers have prices as low as 1€/GB.

A need for coherence between retail prices, wholesale caps and wholesale costs is supported by the Body of European Regulators in Electronic Communications (BEREC), in its recent opinion on the draft FUP act and sustainability of the abolition of retail roaming surcharges: “Retail price ≥ wholesale charge ≥ wholesale cost […] since Roam-like-at-Home (RLAH) necessitates that international roaming retail prices are set equal to domestic prices, entails that domestic retail prices in all EEA Member States should exceed wholesale roaming charges and at the same time the wholesale roaming caps should exceed the wholesale roaming costs”.

It can be seen from current retail offers on EU markets that the actual cost of supplying data at wholesale level is in fact much lower than claimed by the European Commission’s Impact Assessment, in particular for data. An International Telecommunications Union (ITU) report from 2015 shows that there are little justifiable additional costs, in practice, for the provision of international roaming compared to domestic roaming.

It is also essential to note that the shift to 4G-LTE means that the average price per GB will continue to decline sharply in the next years.

In this context, the Coalition welcomes and supports the draft report on the revision of the rules for wholesale roaming markets presented by the European Parliament Rapporteur MEP Miapetra Kumpula-Natri, as well as today’s agreement in Parliament on a glide path for data caps. The report proposes strong reductions of wholesale roaming caps, as well as a periodic review thereof, and contains an explanatory statement which correctly recognises the intrinsic connection between an extended retail Fair Use Policy and the level of wholesale roaming caps. In light of the Fair Use Policy proposals published on 26 September 2016, we consider that to ensure competition and end-user benefits, the wholesale roaming caps should be reduced to an even lower level.

Strongly reduced wholesale caps are essential to make it possible for European end-users to continue to use large data bundles, fully benefit from innovative services going forward, and take advantage of a European digital single market.

It is clear that the considerable investments needed for the deployment of 5G should be incentivised. However, this cannot be done by means of deregulation or regulatory forbearance. Investment requirements do not as such justify forbearance from promoting competition, the internal market, end-user interests, and concomitant wholesale-level regulation (e.g. of national roaming/wholesale MVNO access). A vibrantly competitive market, including MVNOs – who need to be innovative to be able to exist on the market -, is the best guarantee to promote innovation, cross-border solutions and, crucially, take-up of services by users.

We are looking forward to the Commission’s actions aimed at encouraging the deployment of 5G in a healthy and competitive telecom market.

MVNO Europe has always strongly advocated the end of retail roaming charges in Europe. However, an effective ‘roaming-free’ Europe is conditioned to a substantial reduction of regulated international roaming wholesale caps.

Why does MVNO Europe demand a reform of wholesale caps?

MVNOs do not host inbound roamers on their networks and hence are unilateral buyers of wholesale roaming access. Although significant purchases are made, MVNOs have essentially no bargaining power to negotiate international roaming deals with individual Mobile Network Operators (MNOs). Today, wholesale international roaming charges are a large multiple of domestic wholesale roaming prices and this should be considered alarming with a view to the introduction of roam-like-at-home (RLAH). In a context of gradual suppression of retail roaming surcharges, MVNOs face a risk of margin squeeze and thus market eviction, should the wholesale caps be not adequatly reduced.

How has MVNO Europe worked with policymakers?

Since 2013, MVNO Europe has advocated for a true Telecom Single Market and its members have been actively engaged in the decision-making process at European level. Supporting the underlying assumption that a Digital Single Market needs a truly unified telecom market to thrive, we have recalled on many occasions that this must not be done at the expense of competition. As part of our engagement activities, MVNO Europe has responded to the consultation on measures related to the end of roaming surcharges in Europe, providing the Commission with evidences on how crucial a reform of the wholesale market is to smaller mobile operators.

What are the next steps?

MVNO Europe continues to provide input to the European Commission to help in its on-going work to achieve the end of retail roaming surcharges. We also work on issues that are closely interlinked with the regulation of roaming, such as the convergence of Mobile Termination Rates and specific rules for Machine-to-Machine connectivity. Today, more than ever, we are dedicated to achieving a healthy competitive telecoms market.